Social Insecurity

As an alarming number of Americans gloomily give up on the future of Social Security, Washington is scrambling for solutions. A presidential commission wants to put the nation's retirement money in the ever-volatile stock market. But there are better ways to preserve the most popular government program in history than just taking a plunge. Trouble is, few in power want to talk about them--yet.

Daniel patrick moynihan can be a gloomy Irishman, but over the years Washington has learned to listen to his jeremiads. He predicted the collapse of both the inner cities and the Soviet system long before either seemed imminent. The senior senator from New York, who advised both John F. Kennedy and Richard Nixon, has been trying to shore up the welfare state since he was a professor at Harvard in the 1960s. Lately, he has heard the foundations cracking.

Last week Moynihan sat in his darkened office on Capitol Hill, unhappily contemplating the uncertain future of Social Security. He noted that most Americans have given up on the program. More young people believe in UFOs than in the prospect of receiving a Social Security check when they retire; according to the new NEWSWEEK Poll, 61 percent of adult Americans are not confident that Social Security will be there for them. They have lost faith in perhaps the most successful federal program ever, the bedrock of the New Deal promise of beneficent government. "How did that happen?" Moynihan lamented. The pessimism is rooted partly in a pervasive sourness about Washington and partly in some disturbing demographics. Today there are three workers for every retiree. By the time the 76 million baby boomers begin to retire, there will only be two. Can today's twentysomethings, Moynihan worries, be expected to cheerfully work harder and longer in order to pay for their parents' golden years?

So deep is the fatalism about Social Security that the latest commission looking for ways to rescue the system has basically thrown up its hands and decided that government is incapable of fixing itself. Instead, the blue-ribbon panel suggested playing retirement roulette by investing up to half of the taxpayers' money in the stock market (page 24). At first glance, it's a popular notion: the NEWSWEEK Poll found that 50 percent favor putting some Social Security revenues into stocks. But Moynihan acidly observed that the commission's approach is fine--"as long as you believe the market only goes up." If Social Security "goes private," Moynihan says, "you're going to lose it. It won't be there." Poor people, who don't have bank accounts, much less stockbrokers, would be left in what would become essentially a welfare program. Everyone else would take his chances in the market--and if the market crashed, as it well could, they would be out of luck.

But if Moynihan can sometimes make the situation seem hopeless, he also represents the way out. Social Security's problems are in fact not as grave as generally imagined. Overall, government entitlement programs--from federal pensions to the ever-more-expensive Medicare--are out of control. But Social Security can be fixed relatively painlessly. Actually, Moynihan says, almost everyone in Washington knows what to do. It's just that, being politicians, they don't want to talk about it--at least not yet.

The most powerful pol who doesn't want to discuss Social Security is President Clinton. Moynihan met with Clinton in the Oval Office last week. "You see this?" asked Moynihan, holding up the banner headline announcing the commission's recommendations in that morning's New York Times. Moynihan made his argument that "privatizing" Social Security would effectively eliminate the safety net for the elderly. Moynihan won't reveal the president's response, except to say that "[Clinton] got it." Moynihan also says that the president knows what to do, even if he can't publicly say so without bringing down the wrath of the unions and the much-feared American Association of Retired People (AARP).